London Thanasis Gavos

A series of publications about the ties of Russian oligarchs who are under sanctions due to relations with the Kremlin with a Cypriot company, the British newspaper Guardian has posted on its website.

One of the most extensive reports refers to Konstantin Malofeev, who is accused by the West of financing Russian separatists in eastern Ukraine. Known as the “Orthodox oligarch” because of his support for the Russian church, he was placed under sanctions by the EU and the US in 2014 after the annexation of Crimea.

However, he allegedly continued for three years to be a client of the Cypriot accounting and offshore services company MeritServus, which appears to have helped, as an apparent shareholder, companies linked to Malofeev to move money and issue loans, even in US dollars.

The firm appears to have assisted in transactions worth $35m and €2.5m, until it cut ties with the Russian oligarch in the spring of 2017.

The newspaper cites for all this a series of documents leaked by MeritServus of the accountant Dimitris Ioannidis, who was last week put on the UK sanctions list for ties to Roman Abramovich.

The documents, called the “Oligarchs Files” by the Guardian and its partner Organized Crime and Corruption Reporting Program, “will raise fresh concerns about financial controls in Cyprus, an EU member state that has for years facilitated the movement of Russian capital into Europe and beyond”, comments the article.

In a statement, prior to the imposition of sanctions by London, the Cypriot company had rejected any accusation of money laundering or breach of sanctions laws. He added that he severed relations with Malofeev as soon as he realized he was on a sanctions list, informing the Cyprus Association of Chartered Accountants (SELK) and the Anti-Discovery Crimes Unit (MOKAS), with the matter “to be resolved” with both organisations.

In an initial statement SELK stated that as soon as the case became known, it requested a full presentation of data from the company and in the end it was decided that the sanctions had not been violated. Following the imposition of sanctions against MeritServus, SELC said it will assess the situation and consider whether further action is required.

MOKAS stated that it has no legal mandate to implement or monitor the implementation of sanctions.

A representative of the Cypriot government cited by the Guardian states that the country’s support for EU sanctions is “clear and unquestionable”. He added that the cooperation with the respective authorities in Britain and the USA is “exemplary and mutually beneficial” and that Cypriot natural and legal persons under sanctions are controlled by the competent Cypriot authorities.

In a second publication, the Guardian focuses on Mr. Dimitris Ioannidis and the professional and personal relations with Roman Abramovich. It indicates that the Cypriot chartered accountant was in September 2009 among the guests at the birthday party of the former manager of Chelsea, then a group owned by the Russian oligarch.

It is noted that the staff at MeritServus used the code name “Mr. Blue’ for the biggest customer, probably the then owner of Chelsea’s ‘blues’. The company’s relationship with the Russian tycoon began in 2001 and included services to his associates.

The article then examines the relationship between Russian money and Cyprus, commenting that some describe the island as “Moscow in the Mediterranean”.

Reference is made to Russian investments in Cyprus and the large Russian community of Limassol, but also to the use of “golden passports” by Russians.

It is commented that those responsible for the implementation of sanctions are “increasingly concerned about the role that Cyprus has played – and may still be playing – in facilitating the movement of Russian capital”.